A new deal hopes to allow Tasmanian exporters to access markets currently out of reach.

The Federal Government has put an extra $203 million into the Tasmanian Freight Equalisation Scheme.

It is meant to extend the Scheme to goods going to markets not currently covered, allowing Tasmanian businesses selling these goods to claim $700 per shipping container.

Minister for Infrastructure and Regional Development Warren Truss says shippers from King Island and the Furneaux Group of Islands will be eligible for a 15 per cent additional loading.

But the expansion may not solve Tasmania’s main shipping problem – getting goods to international shipping lines.

Mr Truss and Prime Minister Tony Abbott cited recommendations of the Productivity Commission to justify the move.

But the report they invoked actually warned against extending the scheme in this way.

It said reintroducing a direct international service to Tasmania would be a better idea.

Tasmania has had no direct international shipping service since 2011, so the state has been working with the Hong Kong-based Swire Shipping to re-establish an export/import service to connect to Asian hubs and Australian east coast ports.

“Although the long-term commercial sustainability of a direct international service is not certain now or in the future, ­extending the Tasmanian Freight Equalisation Scheme would ­inevitably compromise the ­viability of a (more cost-­effective) international shipping service,” the Productivity Commission warned.

It pushed for the better long-term value from a direct service, which could also introduce more competition to Bass Strait shipping companies.

“There is no coherent economic rationale for the Tasmanian Freight Equalisation Scheme and it falls well short of what is needed to improve the lagging competitiveness of the Tasmanian economy,” the report said.

“It has a high fiscal cost, eligibility is arbitrary; and the direct recipients are concentrated, notwithstanding the unclear incidence of the subsidy.”

Mr Abbott said the new funds would go to around 1300 companies, but the Productivity Commission found that the scheme actually paid over half the subsidies to the top 10 companies, while the least valuable 1000 companies split just 2.7 per cent between them.